SHRIRAMFIN - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 4.4

📊 Long-Term Investment Analysis

Shriram Finance Ltd (SHRIRAMFIN) is a strong candidate for long-term investment, especially for investors seeking exposure to India’s NBFC sector with a focus on commercial vehicle and SME lending.

✅ Strengths

Valuation: P/E of 14.1 is significantly below the industry average of 25.2, indicating undervaluation

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ROE & ROCE: ROE at 15.6% and ROCE at 11.0% reflect solid capital efficiency

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PEG Ratio: 0.32 suggests reasonable valuation relative to expected earnings growth.

Dividend Yield: 1.55% is modest but consistent, with a history of dividend growth

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Debt Management: Though debt-to-equity is high at 4.15, it’s typical for NBFCs and manageable given strong asset quality and AUM growth

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Profit Consistency: PAT has remained stable quarter-on-quarter, indicating earnings reliability.

⚠️ Risks

FII Outflow: Slight decline in FII holding (-0.97%) may reflect cautious sentiment.

Technical Weakness: RSI at 43.5 and MACD negative suggest short-term bearish momentum.

High Leverage: While normal for NBFCs, it requires monitoring in rising interest rate environments.

💰 Ideal Entry Price Zone

Based on valuation and technical indicators

Intrinsic Value Estimate: ₹580–₹610

Current Price: ₹638

DMA 50/200: ₹659 / ₹626

Suggested Entry Zone: ₹600–₹620 This range offers a margin of safety and aligns with technical support and fair value estimates

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🧭 Exit Strategy & Holding Period

📈 Holding Strategy

Time Horizon: 5–7 years to benefit from India’s credit expansion and infrastructure growth.

Growth Targets

2025: ₹840–₹946

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2026: ₹1,134–₹1,358

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2027: ₹1,400–₹1,948

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🚪 Exit Strategy

Partial Exit: If price exceeds ₹950–₹1,000 by 2026–2027, consider booking profits.

Trailing Stop: Use a stop-loss below ₹590 if macro conditions worsen.

Re-evaluate: If ROE drops below 12% or credit costs rise sharply, reassess holding.

Would you like a comparison with other NBFCs like Bajaj Finance or Cholamandalam to see how Shriram stacks up?

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simplywall.st

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www.valueresearchonline.com

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stockanalysis.com

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www.alphaspread.com

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dailybulls.in

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